Higher Rates, Limited Supply Slow Miami Home Sales in December

According to the Miami Association of Realtors, higher mortgage rates resulted in fewer Miami-Dade home sales in December 2018.

After five months of consecutive increases countywide, total Miami-Dade County sales decreased 6.2 percent year-over-year in December 2018, from 2,219 to 2,081. Lack of inventory in lower price points also contributed to the decline in transactions.

"Overall Miami-Dade real estate had another strong year in 2017, including more total sales than what we had in 2018," said 2019 MIAMI Chairman of the Board José María Serrano. "While total sales year-over-year decreased in December due to higher interest rates, now that mortgage rates have declined, we expect to see sales increase in the coming months."

Low mortgage rates make purchasing a home more affordable. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.64 percent in December from 4.87 percent in November. The average commitment rate for all of 2017 was 3.99 percent.

Miami single-family home sales decreased 5.1 percent, from 1,065 to 1,011. Condo sales decreased 7.3 percent, from 1,154 to 1,070. Condo sales had increased in nine of the last 11 months before December. The decrease in December 2018 is due to a lack of inventory in lower price points. Inventory decreases for Miami single-family homes selling at $400,000 and below.

Total sales volume decreased 5.6 percent to $928.8 million in December 2018. Single-family home dollar volume increased 0.2 percent from $538.8 million to $539.6 million. Condo dollar volume decreased 12.5 percent from $444.7 million to $389.2 million.

Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 12 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.

Luxury single-family home sales have now increased or stayed even for eight consecutive months. Luxury existing condo sales have increased in seven of the last 10 months.

Seven Consecutive Years of Price Appreciation in Miami

Miami-Dade County single-family home prices increased 6.7 percent in December 2018, increasing from $332,850 to $355,000. Miami single-family home prices have risen for 85 consecutive months, a streak of seven plus years. Existing condo prices stayed even year-over-year at $235,000. Condo prices have increased or stayed even in 88 of the last 91 months.

Miami Distressed Sales Continue to Drop, Reflecting Healthy Market

Only 6.2 percent of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 8.9 percent in December 2017. In 2009, distressed sales comprised 70 percent of Miami sales.

Short sales and REOs accounted for 1.3 and 4.8 percent, respectively, of total Miami sales in December 2018. Short sale transactions decreased 43.8 percent year-over-year while REOs decreased 32.7 percent.

Nationally, distressed sales accounted for 2 percent of sales, unchanged from 2 perce nt last month and down from 5 percent a year ago.

Miami Real Estate Selling Close to List Price

The median number of days between listing and contract dates for Miami single-family home sales was 56 days, a 30.2 percent increase from 43 days last year. The median number of days between the listing date and closing date for single-family homes was 98 days, a 1 percent increase from 97 days.

The median time to contract for condos was 76 days, a 12.6 percent decrease from 87 days last year. The median number of days between listing date and closing date decreased 9.4 percent to 115 days.

The median percent of original list price received for single-family homes was 94.8 percent. The median percent of original list price received for existing condominiums was 93.1 percent.

National and State Statistics

Nationally, total existing-home sales decreased 6.4 percent from November to a seasonally adjusted rate of 4.99 million in December. Sales are now down 10.3 percent from a year ago (5.56 million in December 2017).

Statewide closed sales of existing single-family homes totaled 20,633 last month, down 9.9 percent compared to December 2017, according to Florida Realtors. Statewide closed condo sales totaled 8,156, down 11.4 percent compared to a year ago.

The national median existing-home price for all housing types in December was $253,600, up 2.9 percent from December 2017 ($246,500). December's price increase marks the 82nd straight month of year-over-year gains.

December marked 84 consecutive months of year-over-year statewide median sale price increases for both single-family homes and condo-townhouse properties. The statewide median sales price for single-family existing homes was $255,000, up 4.2 percent from the previous year. Last month's statewide median price for condo-townhouse units was $185,000, up 2.8 percent over the year-ago figure.

Miami's Cash Buyers Represent Almost Double the National Figure

Miami cash transactions comprised 34.8 percent of December 2018 total closed sales, compared to 39.3 percent last year. Miami cash transactions are almost double the national figure (22 percent).

Miami's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international home buyers, who tend to purchase properties in all cash. Miami has a higher percent of cash sales for condos due to lack of financing approvals for buildings.

Condominiums comprise a large portion of Miami's cash purchases as 48.1 percent of condo closings were made in cash in December compared to 20.7 percent of single-family home sales.

Balanced Market for Single-Family Homes, Buyer's Market for Condos

Inventory of single-family homes increased 15.1 percent in December from 5,969 active listings last year to 6,872 last month. Condominium inventory increased 5.8 percent to 15,852 from 14,984 listings during the same period in 2017.

The increase in inventory is for properties above $300,000 for condos and for properties above $600,000 for single family homes.

Months supply of inventory for single-family homes increased 14.3 percent to 6.4 months, which indicates a balanced market. Existing condominiums have a 13.7-month supply, which indicates a buyer's market. A balanced market between buyers and sellers offers between six and nine months supply.

Total active listings at the end of December increased 8.5 percent year-over-year, from 20,953 to 22,724. Active listings remain about 60 percent below 2008 levels when sales bottomed.

New listings of Miami single-family homes decreased 4 percent to 1,220 from 1,271. But new listings for homes priced between $400,000 to $999,999 increased 7.3 percent. New listings of condominiums decreased 0.2 percent, from 1,782 to 1,778.

Nationally, total housing inventory at the end of December decreased to 1.55 million, down from 1.74 million existing homes available for sale in November. This represents an increase from 1.46 million a year ago, however. Unsold inventory is at a3.7-month supply at the current sales pace, down from 3.9 last month and up from 3.2 months a year ago.

According to the newly released 2018 Profile of International Home Buyers Report by the Miami Association of Realtors and the National Association of Realtors, foreign buyer activity in South Florida had a significant 23 percent spike in 2018.

According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes rose to a seasonally adjusted annual rate of 667,00 units in February 2019 after an upwardly revised January 2019 report.

According to the Miami Association of Realtors, Miami mid-market home sales and median prices for all properties increased in February 2019, reflecting demand for local properties, particularly in certain price points.

According to the U.S. Housing and Urban Development and Commerce Department, total U.S. housing starts rose 18.6 percent in January 2019 to a seasonally adjusted annual rate of 1.23 million units from a downwardly revised reading in December 2018.